China’s industrial profits rose 15.2% year-on-year in Jan–Feb 2026, beating expectations, before Middle East tensions drove oil prices up about 50% and lifted raw material costs. Earnings had stabilized in 2025 after years of decline. While stronger metals prices and policy efforts eased deflation, rising input costs now threaten margins, benefiting upstream energy firms. Producer prices may turn positive in March, ending deflation, but profitability remains weak, with margins at a record-low 5.

China’s industrial profits rose 15.2% year-on-year in Jan–Feb 2026, beating expectations, before Middle East tensions drove oil prices up about 50% and lifted raw material costs. Earnings had stabilized in 2025 after years of decline. While stronger metals prices and policy efforts eased deflation, rising input costs now threaten margins, benefiting upstream energy firms. Producer prices may turn positive in March, ending deflation, but profitability remains weak, with margins at a record-low 5.3% in 2025.